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Working Paper No. 915

Congestion Management in Electricity Networks: Nodal, Zonal and Discriminatory Pricing

Working Paper
Reference
Holmberg, Pär and Ewa Lazarczyk (2012). “Congestion Management in Electricity Networks: Nodal, Zonal and Discriminatory Pricing”. IFN Working Paper No. 915. Stockholm: Research Institute of Industrial Economics (IFN).

Authors
Pär Holmberg, Ewa Lazarczyk

Wholesale electricity markets use different market designs to handle congestion in the transmission network. We compare nodal, zonal and discriminatory pricing in general networks with transmission constraints and loop flows. We conclude that in large games with many producers who are allowed to participate in the real-time market the three market designs result in the same efficient dispatch. However, zonal pricing with counter-trading results in additional payments to producers in export-constrained nodes.
 

Pär Holmberg

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